Summers's message for the UK: never do today what you can put off 'til tomorrow

It's bad form to attack rival columnists, and usually a mistake, as one's own musings are rarely above criticism either. But Larry Summers, a former US Treasury Secretary, is one of the grandees of economics, and reflects a particular, left leaning, approach to the debate around fiscal consolidation, so he's fair game.

What I find particularly irritating about this line of argument is the arrogance of the assertion, repeated by Summers in today's article, that anyone who doesn't go along with it doesn't know anything about economics.

It's textbook stuff, he asserts, that when private demand is subdued and you are already up against the zero interest rate band, that you should attempt to counter it with public demand until the economy picks up again.

Far be it for me to challenge such an intellectual colossus, but there are a couple of things wrong with the Summers view. One is something of a misunderstanding of the nature of the British problem. For starters, there has not actually been that much of a fiscal squeeze so far. Admittedly, there have been some tax rises, which have depressed consumption a bit, but the far bigger negative effect on disposable incomes has come from relatively high levels of inflation unmatched by increases in wages.

There have also been some big cuts in capital spending, which I would agree, are not the right thing to do at a time when companies are also cutting back sharply on investment. But public sector current spending has been rising. Britain has some big automatic stabilisers – it's called the welfare state – which largely prevent the sort of phenomenon Summers complains of. In America, what Britain is doing would probably count as a discretionary fiscal stimulus.

There has simply not been the intensification of the fiscal squeeze into the downturn which Mr Summers seems to imagine. Nor on the current set of policies is there likely to be. Any fiscal consolidation, however mild, is bound to have some negative impact on growth in the short term, but the scale of what we've seen to date cannot explain the degree to which recovery in the UK seems to have lagged other G7 economies.

The reality is that the UK was in a much deeper hole right from the start, with very high and unsustainable levels of both household indebtedness and public spending. There had also been a quite severe erosion in competitiveness in some areas of the economy. For years, this was covered up by a government which spent well beyond its means and encouraged households to do the same.

At some stage, these things have to be corrected. It is worth noting that even if the Coalition succeeds with its deficit reduction strategy – which now looks quite unlikely – government spending and taxation in the UK will still be significantly higher than that of Mr Summers' native America. He doesn't seem to recognise that taxes and public spending are already at unsustainable levels in the UK. Bringing about a smaller state is not a matter of ideological conviction, but of economic necessity.

If the present Government ducks the problem, as Mr Summers suggests, with vague promises of spending reform at some stage in the future, correction is most unlikely to happen at all – or in any case, not in an orderly and self determined way. At some stage Britain would be plunged into renewed financial and economic crisis, forcing a degree of pain on the country which at present is being quite skillfully avoided.